Is the Private Sector more Efficient?

Published on 08 Jan 2016

A cautionary tale

Starting in the 1980s, new approaches to public administration were developed with the aim of “fixing government by running it like a business”. Implicit in this credo was the assumption that the private sector was more efficient than the public sector, and that privatisation and competition would make public services more efficient. Though some of these approaches have since been phased out and replaced by newer concepts, the argument over the private sector being inherently more efficient than the public sector was never fully settled.

This discussion paper makes a strong case challenging the assumption of the primacy of the private sector. It suggests that, first, “no model of ownership (public, private or mixed) is intrinsically more efficient than the others”; and second, that “efficiency of service provision under all ownership models depends on factors like competition, regulation, autonomy and wider issues of institutional development”.

If successful delivery of the UN Sustainable Development Goals is to be achieved, public service needs not only stout arguments in its defence from development practitioners and agencies, but also the genuine empowerment backed by political will, so as to make public service the rightful custodian of the public good.

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